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China took one huge step forward on Wednesday with the announcement of national guidelines that make the services of ride-hailing such as Didi Chuxing and Uber legal starting in November.
Drivers at both services as well as others such as Yidao Yongche, which is majority owned by LeEco the electronics company, have operated in gray areas with police detaining drivers and impounding their vehicles on what has been called an inconsistent basis.
The new regulations have yet to be adopted by local and regional officials across the country, but the new set of rules released by Chinese officials is a huge step in the right direction to fix the problems being experienced by ride-hailing companies.
The new rules state that online services for car booking will be legal starting in November. The government will be encouraging the development of online booking, non-cash payments and an overall sharing economy.
In addition, the rules said drivers must have at least three years experience driving to work for a ride-hailing company, cars cannot have over seven seats and when 600,000 km is reach they have to be retired from the service or if they are more than 8 years old.
The information that is collected by the car hailing platforms of their users must be stored in China and for a minimum of two years.
Some stipulations might count against drivers that are part-time and it is still unclear how it will impact the fleet of vehicles for Didi and Uber.
In general, the two platforms have both been vocal in the welcoming of the new regulations, most likely due to them not being extreme in nature, as a version earlier had been.
Uber called China’s announcement of new regulations a needed welcome step, while its rival Didi Chuxing, acknowledged widely as the leader in China for ride-hailing, called the regulations a positive first step.
However, things are not so rosy starting out. The new rules must be adopted by both the municipal and provincial governments throughout China and to comply with them, the companies offering ride-hailing services will have to apply as well as gain new licenses for the business.
Didi has already set aside $15 million to be used as a development fund as a way to speed up the company’s integration with China’s regulators, drivers and taxi firms, but has voiced concern at the proposed process of licensing.